Patrick orders cuts to fill $540M state budget gap

Tuesday

Dec 4, 2012 at 2:00 PMDec 4, 2012 at 3:09 PM

By John J. Monahan TELEGRAM & GAZETTE STAFF

Gov. Deval L. Patrick today announced $225 million in cuts to state programs and services and proposed additional cuts in local aid to cities and towns, and legislative and judiciary spending — to solve a projected $540 million shortfall in state revenues through July.

Mr. Patrick said the cuts to state programs, amounting to 1 percent of overall spending, are needed to fill a budget gap created by slower economic growth than anticipated when revenue figures were projected a year ago.

The governor said the so-call fiscal cliff looming before the federal government has slowed economic growth across the country.

“The uncertainty of the fiscal cliff and the resulting slowdown in growth is the direct cause of our budget challenges,” the governor said at a Statehouse press conference today.

“Congress and the president must come to terms on a solution so the private sector will continue to make the kind of investments that create jobs, grow state and federal tax revenue collections and contribute to a lasting economic recovery,” Mr. Patrick said.

Without a resolution, he said, deep federal spending cuts and tax hikes that would go into effect Jan. 1 are expected to result in the state losing an estimated $300 million through the rest of this fiscal year and another $1 billion in the coming fiscal year.

The governor is using his emergency fiscal authority to order the cuts.

The 1 percent cut in state programs and services goes into effect immediately. It includes a freeze on filling 700 state positions. Mr. Patrick's call for spending cuts outside the executive branch, including $9 million in local aid to cities and towns, and 1 percent cuts in judiciary and legislative spending, would have to be approved by the Legislature.

The governor said there would be no reductions in the record high Chapter 70 state funds for public schools. But other spending reductions, including cuts to state allocations for reimbursement to cities and towns for regional bus services and local special education costs could further impact municipal programs.

The immediate cuts in state spending would reduce the planned level of increase in rates the state pays for nursing home care by $15 million; trim an increase in local special education reimbursements from $28 million to $17 million; cut $14 million from a variety of state grants programs for local community programs; and reduce spending on veterans' care by $1.3 million. The veterans' care cut was made possible by a lower than expected caseload.

The governor said state revenues through October were running $256 million below projections. Without a surge in economic growth the administration is projecting a $540 million gap through the end of the year.

Administration and Finance Secretary Jay Gonzalez said that since July 1, the state economy has been growing at a rate of 1.9 percent instead of the anticipated 3 percent rate, reducing state tax revenues.

Geoff Beckwith, executive director of the Massachusetts Municipal Association, said today that his organization will ask lawmakers to reject the proposed $9 million cut in local aid, noting that cities and towns may have to consider municipal layoffs and local program cuts to balance their books.

Moreover, he said, taking the step now would also signal to municipalities that deeper cuts in state aid may be coming in the second half of the fiscal year, if the economic slowdown continues.

“We will respectfully be asking the Legislature to forgo and not support this $9 million cut,” Mr. Beckwith said.

State Rep. Harold P. Naughton, D-Clinton, who is heading up legislative oversight state response to a drug lab scandal that could jeopardize evidence in thousands of drug cases, said the governor did not call for eliminating a $30 million allocation from its rainy day reserves to cover those costs, which he warned could rise dramatically.

“We will work with the governor to do whatever we can to protect the most vulnerable in our population, but my fear is this is just the start,” Mr. Naughton said. He said he is hoping that when the Legislature begins a new session in January it can consider alternatives to other major cuts if they are needed in the current fiscal year.

Besides the spending cuts, the budget gap would also be filled with $98 million in unanticipated new federal funds for safety net programs for low income residents, $20 million from savings from lower health care and borrowing costs, and a $200 million drawdown from the $1.4 billion rainy day reserves.